<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
UNUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
UNUM CORPORATION
[LOGO] 2211 Congress Street
Portland, Maine 04122
March 27, 1998
To Our Stockholders:
You are invited to attend the 1998 Annual Meeting of Stockholders of UNUM
Corporation. The meeting will be held on May 8, 1998, at 10:30 a.m. at the
Portland Marriott, 200 Sable Oaks Drive, South Portland, Maine.
The items to be considered at this meeting are detailed in this proxy
statement. Also enclosed is a copy of UNUM Corporation's 1997 Annual Report,
including consolidated financial statements.
WHETHER OR NOT YOU PLAN ON ATTENDING THE ANNUAL MEETING, WE ASK THAT YOU
COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. PLEASE
TAKE NOTE THAT IF YOU ARE PLANNING TO ATTEND THE ANNUAL MEETING, THERE IS A BOX
TO CHECK ON THE PROXY CARD IN ORDER TO REQUEST AN ADMISSION TICKET.
Thank you for your interest in and commitment to UNUM Corporation. We look
forward to seeing you at the meeting.
Sincerely,
/s/ James F. Orr III
JAMES F. ORR III
Chairman and
Chief Executive Officer
<PAGE>
UNUM CORPORATION
2211 CONGRESS STREET
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of UNUM
Corporation, a Delaware corporation, will be held at the Portland Marriott, 200
Sable Oaks Drive, South Portland, Maine, on May 8, 1998, at 10:30 a.m., local
time, for the following purposes:
1. To elect four directors to serve for three-year terms expiring in
2001;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the
Corporation's independent auditors for the year 1998; and
3. To transact any other business that may properly come before the
Annual Meeting.
The close of business on March 10, 1998, has been fixed as the record date
for determination of the stockholders entitled to notice of and to vote at the
Annual Meeting.
By order of the Board of Directors,
/s/ Kevin J. Tierney
KEVIN J. TIERNEY
SECRETARY
YOUR VOTE IS IMPORTANT TO ENSURE THAT A MAJORITY OF THE STOCK IS
REPRESENTED. PLEASE DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
March 27, 1998
Portland, Maine
<PAGE>
UNUM CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 1998
GENERAL INFORMATION
This proxy statement concerns the Annual Meeting of Stockholders of UNUM
Corporation, a Delaware corporation (the "Corporation" or "UNUM"), to be held on
May 8, 1998 (the "Annual Meeting"). The Board of Directors is soliciting your
proxy for use at the meeting and at any adjournment of the meeting by asking you
to date, sign and return the enclosed proxy card.
For proxy cards properly dated, signed and returned, the shares will be
voted at the meeting in accordance with each stockholder's directions. Please
vote by marking the appropriate boxes on the enclosed proxy card. If the card is
signed and returned without directions, the shares will be voted "FOR" the
election of all directors as nominated and "FOR" the ratification of Coopers &
Lybrand L.L.P. ("Coopers & Lybrand") as the Corporation's independent auditors.
If other matters properly come before the meeting, the shares will be voted in
accordance with the best judgment of the persons named as proxies on the proxy
card. Any shares not voted "FOR" a particular director as a result of a
direction to withhold or a broker nonvote will not be counted in such director's
favor. All matters to be acted on at the Annual Meeting other than the election
of directors require the affirmative vote of a majority of the shares present in
person or by proxy at the meeting to constitute the action of the stockholders.
In accordance with Delaware law, abstentions will, while broker nonvotes will
not, be treated as present for this purpose. A broker nonvote is a proxy
submitted by a broker in which the broker fails to vote on behalf of a client on
a particular matter for lack of instruction when such instruction is required by
the New York Stock Exchange. A proxy may be revoked by a stockholder at any time
before its use by giving written notice of revocation to the Corporate Secretary
of the Corporation, 2211 Congress Street, Portland, Maine 04122, by submitting a
subsequent proxy, or by voting in person at the Annual Meeting. This proxy
statement and the enclosed proxy card are being sent to stockholders beginning
approximately March 27, 1998.
The Corporation had 137,982,862 outstanding shares of Common Stock, par
value $0.10 per share (the "Common Stock"), as of March 10, 1998.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Generally, at each
annual meeting, one class of directors, or approximately one-third of the total
number of directors, is elected and the term of that class is three years. As of
the close of the Corporation's last Annual Meeting of Stockholders on May 9,
1997, there were four Class III directors, four Class I directors and four Class
II directors, serving terms expiring in 1998, 1999 and 2000, respectively. The
term of the Class III directors expires with this Annual Meeting.
The Board of Directors proposes the election of George J. Mitchell, Lawrence
R. Pugh, Lois Dickson Rice and John W. Rowe as Class III directors, to hold
office for a term of three years, expiring at the close of the Annual Meeting of
Stockholders to be held in 2001 and until their successors are elected and
qualify. Each nominee is currently serving as a member of the Board of Directors
of the Corporation.
2
<PAGE>
If any nominee should become unable to serve, the persons named as proxies
on the proxy card will vote for the person or persons the Board of Directors
recommends, if any. The Board of Directors has no reason to believe that any of
the named nominees is not available or would be unable to serve if elected.
Set forth below is information about each nominee and continuing director,
including age, position(s) held with the Corporation, principal occupation,
business history for at least five years and other directorships held. The terms
of office for each of the remaining directors continue until the close of the
Annual Meeting of Stockholders in the year shown along with each director's
name.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE SINCE POSITION(S) HELD EXPIRES
- ------------------------------ ---- --------- -------------------- ----------
<S> <C> <C> <C> <C>
James F. Orr III.............. 55 1986 Chairman and Chief 1999
Executive Officer
Gayle O. Averyt............... 64 1993 Director 2000
Robert E. Dillon, Jr.......... 66 1990 Director 1999
Gwain H. Gillespie............ 66 1991 Director 2000
Ronald E. Goldsberry.......... 55 1993 Director 1999
Donald W. Harward............. 58 1990 Director 1999
George J. Mitchell............ 64 1995 Director 1998
Cynthia A. Montgomery......... 45 1990 Director 2000
James L. Moody, Jr............ 66 1988 Director 2000
Lawrence R. Pugh.............. 65 1988 Director 1998
Lois Dickson Rice............. 65 1993 Director 1998
John W. Rowe.................. 52 1988 Director 1998
</TABLE>
3
<PAGE>
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 2001:
<TABLE>
<S> <C>
GEORGE J. MITCHELL
Special Counsel
Verner, Liipfert, Bernhard, McPherson & Hand
[PHOTO] Washington, D.C.
George J. Mitchell associated with the firm of Verner, Liipfert, Bernhard,
McPherson & Hand, Washington, D.C., as special counsel in January 1995 and associated
with the firm of Preti, Flaherty, Beliveau & Pachios, Portland, Maine, as senior
counsel in April 1997. He also serves as an advisor to B.T. Wolfensohn, an investment
banking firm. At the request of the British and Irish governments, he serves as
chairman of the peace negotiations in Northern Ireland. Previously, he served as a
United States senator from Maine from 1980 to 1994 and additionally as Senate Majority
Leader from 1989 to 1994. Senator Mitchell also serves as a director or trustee of
Federal Express Corporation, Starwood Hotels and Resorts, The Walt Disney Company and
Xerox Corporation.
LAWRENCE R. PUGH
Chairman
VF Corporation
[PHOTO] Reading, Pennsylvania
Lawrence R. Pugh is Chairman of VF Corporation, an apparel company in Pennsylvania,
a post he has held since 1983. Additionally, Mr. Pugh served as Chief Executive Officer
from 1983 to 1995. He is also a director of Mercantile Stores Company, Inc. and
Milliken & Company.
LOIS DICKSON RICE
Guest Scholar
The Brookings Institution
[PHOTO] Washington, D.C.
Lois Dickson Rice is a guest scholar at The Brookings Institution, a post she has
held since October 1991. She also serves as a director of Fleet Financial Group, Inc.,
HSB Group, Inc., International Multifoods Corporation and McGraw-Hill, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
JOHN W. ROWE
Chairman, President and Chief Executive Officer
Unicom Corporation
[PHOTO] Chicago, Illinois
John W. Rowe is Chairman, President and Chief Executive Officer of Unicom
Corporation and its principal subsidiary, Commonwealth Edison Company, a post he
assumed in March 1998. Previously, Mr. Rowe was President and Chief Executive Officer
of New England Electric System from 1989 to February 1998. Mr. Rowe is also a director
of Bank of Boston Corporation and First National Bank of Boston.
CONTINUING DIRECTORS:
GAYLE O. AVERYT
Retired Executive
[PHOTO] Columbia, South Carolina
Gayle O. Averyt retired as Chairman of Colonial Companies, Inc. in December 1993, a
post he had held since 1989. Additionally, Mr. Averyt served as Chairman of Colonial
Life & Accident Insurance Company from 1970 to December 1993. Mr. Averyt also serves as
a member of the South Carolina State Ports Authority.
ROBERT E. DILLON, JR.
Retired Executive
[PHOTO] Westfield, New Jersey
Robert E. Dillon, Jr. retired as Executive Vice President of Sony Electronics Inc.,
a New Jersey-based electronics firm, in December 1995, a post he had held since 1981.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
GWAIN H. GILLESPIE
Retired Executive
[PHOTO] Sunapee, New Hampshire
Gwain H. Gillespie retired as Vice Chairman of the Corporation in October 1992, a
post he had held since 1991. Mr. Gillespie joined UNUM in September 1988.
RONALD E. GOLDSBERRY
Global Vice President and General Manager
Global Ford Customer Service Operations
Ford Motor Company
[PHOTO] Detroit, Michigan
Ronald E. Goldsberry is Global Vice President and General Manager of Global Ford
Customer Service Operations at Ford Motor Company, a post he has held since January
1997. Previously, Dr. Goldsberry served as General Manager of the Customer Service
Division from February 1994 to December 1996 and General Sales and Marketing Manager
for the Parts and Service Division from October 1991 to February 1994. He is also
Chairman of UNC Ventures, Inc., a venture capital firm.
DONALD W. HARWARD
President
Bates College
[PHOTO] Lewiston, Maine
Donald W. Harward is President of Bates College in Maine, a post he has held since
October 1989.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
CYNTHIA A. MONTGOMERY
John G. McLean Professor of Business Administration
Harvard University Graduate School of
Business Administration
[PHOTO] Boston, Massachusetts
Cynthia A. Montgomery is a professor of competition and strategy at Harvard
University Graduate School of Business Administration, a post she has held since 1989,
and was named John G. McLean Professor of Business Administration in June 1995. She
also serves as a director of Newell Co. and certain Merrill Lynch mutual funds.
JAMES L. MOODY, JR.
Retired Executive
[PHOTO] Cape Elizabeth, Maine
James L. Moody, Jr. retired as Chairman of Hannaford Bros. Co. ("Hannaford"), a
Maine-based food retailing company in May 1997, a post he had held since 1984. Mr.
Moody joined Hannaford in 1959. He is also a director of Empire Company Limited, IDEXX
Laboratories, Inc., Penobscot Shoe Company, Staples, Inc. and several funds of the
Colonial Group of mutual funds.
JAMES F. ORR III
Chairman and Chief Executive Officer
UNUM Corporation
[PHOTO] Portland, Maine
James F. Orr III was elected Chairman of the Corporation in February 1988.
Additionally, he has served as President and Chief Executive Officer since September
1987. Mr. Orr joined the Corporation in 1986. Mr. Orr also serves as a director of
Nashua Corporation.
</TABLE>
7
<PAGE>
SECURITY OWNERSHIP (1)
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Corporation, as of March 13, 1998, by each
director, nominee and named executive officer, and by all directors, nominees
and executive officers of the Corporation as a group. The share holdings
reported for all directors, nominees and executive officers as a group
(excluding shares of phantom Common Stock) total 1.7 percent of the outstanding
shares on March 13, 1998, as calculated pursuant to the rules of the Securities
and Exchange Commission (the "Commission"). All other amounts reported total
less than one percent of the outstanding shares on such date.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OWNED
SUBJECT TO
OPTIONS
SHARES EXERCISABLE TOTAL SHARES
DIRECTORS, NOMINEES AND BENEFICIALLY AS OF MAY 31, BENEFICIALLY OWNED
NAMED EXECUTIVE OFFICERS OWNED (2) 1998 (2)
- -------------------------------------------------------- -------------- ----------------- --------------------
<S> <C> <C> <C>
James F. Orr III........................................ 302,661(3) 473,254 775,915(3)
Gayle O. Averyt......................................... 303,950(4) 6,000 309,950(4)
Robert E. Dillon........................................ 10,793 18,000 28,793
Gwain H. Gillespie...................................... 62,425(5) 12,000 74,425(5)
Ronald E. Goldsberry.................................... 6,644 14,000 20,644
Donald W. Harward....................................... 3,470(6) 16,000 19,470(6)
George J. Mitchell...................................... 2,779 10,000 12,779
Cynthia A. Montgomery................................... 2,948(7) 18,000 20,948(7)
James L. Moody, Jr...................................... 8,038 20,000 28,038
Lawrence R. Pugh........................................ 14,931 20,000 34,931
Lois Dickson Rice....................................... 1,765 14,000 15,765
John W. Rowe............................................ 3,038 12,000 15,038
Robert W. Crispin....................................... 100,739 127,752 228,491
Stephen B. Center....................................... 87,450 54,812 142,262
Elaine D. Rosen......................................... 61,863 46,306 108,169
Robert E. Broatch....................................... 38,612 31,099 69,711
All directors, nominees and executive officers as a
group (20 persons including the above named)*......... 1,248,474(8) 1,140,023 2,388,497(8)
</TABLE>
- ------------
(1) The number of shares reflected which, under applicable Commission
regulations, are deemed to be beneficially owned. Unless otherwise
indicated, the person indicated holds sole voting and dispositive power.
(2) Includes 30,400 shares of phantom Common Stock credited to Mr. Crispin's
account relative to the surrender of 30,400 shares of time-lapse restricted
stock (see description under "Other Agreements and Transactions"); the
following number of shares of phantom Common Stock credited to the named
executive officers' accounts under the Corporation's Nonqualified 401(k)
Plan: Mr. Orr: 2,091 shares; Mr. Crispin: 1,878 shares; Mr. Center: 1,638
shares; Ms. Rosen: 886 shares; and Mr. Broatch: 514 shares; and the
following numbers of shares of phantom Common Stock credited to the
8
<PAGE>
non-employee directors' accounts under the Corporation's Director Deferred
Compensation Plan: Mr. Dillon: 5,393; Mr. Gillespie: 4,786; Dr.
Goldsberry: 4,844; Senator Mitchell: 1,779; Ms. Montgomery: 948; Mr.
Moody: 38; Mr. Pugh: 10,931; Ms. Rice: 1,165; and Mr. Rowe: 2,038.
(3) Includes 30,459 shares held by Mr. Orr's spouse and child.
(4) Includes 33,349 shares held by Mr. Averyt's spouse and 111,698 shares held
in trust for the benefit of the family members under various trusts pursuant
to which Mr. Averyt, as trustee, has sole or shared voting or dispositive
power. Mr. Averyt disclaims beneficial ownership of 19,077 of these shares
held in trust.
(5) Includes 51,653 shares held jointly with or by Mr. Gillespie's spouse.
(6) Includes 3,470 shares held jointly with Dr. Harward's spouse.
(7) Includes 2,000 shares held jointly with Ms. Montgomery's spouse.
(8) Includes 192,806 shares held in the name of a spouse, child or certain other
relative sharing the same home as the director or executive officer, or held
by the director or executive officer, or the spouse of the director or
executive officer, as a trustee or as a custodian for family members.
* Includes officers of subsidiaries who are not officers of the Corporation
but are considered "executive officers" of the Corporation under rules of
the Commission.
Indicated below are the number of shares beneficially owned as of December
31, 1997, by holders of more than five percent of the Common Stock as reported
to the Commission by such holders on Form 13G and the percentage of the total
shares of the Common Stock outstanding which such holdings represented on such
date. American Express Company, 200 Vesey Street, New York, NY 10285, and its
subsidiary, American Express Financial Corporation, IDS Tower 10, Minneapolis,
MN 55440, reported beneficial ownership of 13,239,515 shares (9.58 percent),
including shared voting power over 9,622,145 shares and shared dispositive power
over all such shares; Janus Capital Corporation, 100 Fillmore Street, Denver,
Colorado 80206, reported beneficial ownership of 10,531,009 shares (7.62
percent), including shared voting and dispositive power over all such shares;
and The Prudential Insurance Company of America, 751 Broad Street, Newark, New
Jersey 07102, reported beneficial ownership of 7,069,699 shares (5.11 percent),
including sole voting and dispositive power over 651,832 shares, shared voting
power over 6,042,967 shares and shared dispositive power over 6,417,867 shares.
In addition, FMR Corp., 82 Devonshire Street, Boston, MA 02109, has informed the
Corporation that on February 25, 1998 it held 13,770,489 shares, including sole
voting power over 902,419 shares and sole dispositive power over all such
shares. The 13,770,489 shares represented 9.99 percent of the outstanding shares
of the Corporation on such date.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held ten meetings during 1997. Average attendance at
Corporation board and committee meetings in 1997 was 99.4 percent. Each director
attended more than 75 percent of the board and committee meetings of which he or
she was a member. The Board of Directors has four standing committees,
responsible for assisting the full Corporation board in the discharge of its
responsibilities. Each committee member is appointed annually and serves until a
successor is named. All committees report their deliberations and
recommendations to the full Corporation board. The membership and principal
responsibilities of each committee are described below.
9
<PAGE>
The Audit Committee, which held four meetings in 1997, consists of four
directors: Mr. Rowe, who is Chairperson, Mr. Averyt, Senator Mitchell and Mr.
Moody. This committee is responsible for reviewing the activities of the
Corporation's independent auditors and the internal audit department, with
particular attention to corporate accounting, reporting practices of the
Corporation, the quality and integrity of its financial statements, internal
controls and the independence of the outside auditors. Each year it is
responsible for recommending to the full Corporation board the appointment of
independent auditors.
The Compensation Committee, which held six meetings in 1997, consists of
three directors: Mr. Pugh, who is Chairperson, Dr. Goldsberry and Dr. Harward.
This committee is responsible for monitoring compensation practices to ensure
that compensation is designed and administered in a manner that is consistent
with the Corporation's compensation principles, objectives and strategy.
The Board Governance Committee, which held three meetings in 1997, consists
of four directors: Mr. Moody, who is Chairperson, Ms. Montgomery, Mr. Pugh and
Mr. Rowe. This committee is responsible for recommending Corporation board
membership candidates and compensation for Corporation board and committee
membership to the full Corporation board. The committee is also responsible for
determining committee composition and conducting periodic evaluations of the
Corporation board's performance and of the contribution of individual
Corporation board members.
The Investment Committee, which held two meetings in 1997, consists of four
directors: Ms. Montgomery, who is Chairperson, Mr. Dillon, Mr. Gillespie and Ms.
Rice. This committee is responsible for reviewing investment policy and related
investment strategy and for monitoring the performance of the investment results
of the Corporation and its subsidiaries. In particular, the committee is
responsible for reviewing risk management practices, non-performing assets and
related reserving policy.
The By-Laws of the Corporation establish an advance notice procedure with
regard to the nomination, other than by or at the direction of the Corporation
board, of candidates for election as directors. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the Corporation not less than 60 nor more than 90 days prior to the
meeting at which directors are to be elected, unless less than 75 days notice of
the date of the meeting is given or made to stockholders, in which case notice
by the stockholder must be received not later than the close of business on the
15th day following the day on which such notice of the date of the meeting was
mailed. A stockholder's notice to the Secretary shall set forth (a) as to each
nominee for director (i) the name, age, business address and residence address
of the person; (ii) the principal occupation or employment of the person; (iii)
the class and number of shares of the Corporation that are beneficially owned by
the person; and (iv) any other information relating to the person that is
required to be disclosed in solicitations of proxies for election of directors
pursuant to Rule 14(a) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and any other applicable laws or rules or regulations of
any governmental authority or of any national securities exchange or similar
body overseeing any trading market on which shares of the Corporation are
traded, and (b) as to the stockholder giving the notice (i) the name and record
address of the stockholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by the stockholder.
COMPENSATION OF DIRECTORS
Non-employee directors are paid an annual retainer of $27,500 by the
Corporation. Directors who chair a committee of the Corporation board are paid
an additional annual retainer of $4,000. Directors are
10
<PAGE>
also paid an attendance fee of $1,000 for each board meeting attended, and an
additional $1,000 for each committee meeting attended. Directors may defer their
compensation pursuant to a nonqualified deferred compensation plan, including an
opportunity to invest in phantom Common Stock. Directors are also reimbursed for
out-of-pocket expenses relating to attendance at meetings.
In order to further align the interests of the directors with those of the
stockholders, during 1997 the Board of Directors adopted stock ownership
expectations that provide that over a five-year period each director is to
accumulate Common Stock (exclusive of stock options) valued at three-times the
annual retainer paid to the director. In addition, during 1997, the Board
determined to discontinue the consulting fee arrangement that was previously in
place in favor of a stock-based form of compensation. Specifically, effective as
of the 1997 Annual Meeting, further benefits under that consulting fee
arrangement ceased to accrue, so that upon termination of Board service, each
eligible director will be entitled to receive an annual consulting fee fixed at
$27,500 for only the number of full years each such director had served as of
May 31, 1997. In lieu of the continued accrual of benefits under the consulting
fee arrangement, the Board of Directors voted to increase the size of the
existing annual non-employee director stock option grants under the 1990
Long-Term Stock Incentive Plan. As of May 10, 1997, each continuing non-employee
director receives an annual automatic grant of an option to purchase 4,000
shares of Common Stock. Each newly elected non-employee director will receive an
automatic grant of an option to purchase 6,000 shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ELECTION OF
THE ABOVE NOMINEES.
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of its Audit Committee, has
appointed Coopers & Lybrand as independent auditors for the year 1998. Although
not required, the Board has determined that it is desirable to request
ratification of this appointment by the stockholders of the Corporation. If
ratification is not obtained, the Board will reconsider the appointment.
The Corporation has been advised that representatives of Coopers & Lybrand
will be present at the Annual Meeting. They will be afforded the opportunity to
make a statement, should they desire to do so, and to respond to appropriate
questions.
Coopers & Lybrand has served as the Corporation's independent auditors since
1993.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
ITEM 3. OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. If other matters are presented, it is intended that the persons
named as proxies on the proxy card will have discretionary authority to vote on
such matters in accordance with their best judgment.
11
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
OVERVIEW
- - The three-member Committee makes decisions on compensation for executives of
the Corporation and its subsidiaries, subject to the ratification of the full
Board of Directors in the case of cash compensation for the Corporation's
Chief Executive Officer.
- - All of the members of the Committee are outside directors as defined under
the Internal Revenue Code ("the Code") and Non-Employee Directors as defined
under Rule 16b-3 promulgated under the Exchange Act.
- - The Corporation's compensation philosophy is "Pay for Results." Compensation
is designed to support the attainment of the Corporation's strategic goals
and to balance the focus on short- and long-term performance goals.
- - The compensation programs for executives are highly dependent upon the
Corporation's performance and significant portions of executives' total
compensation are tied to UNUM's return to stockholders. There are three
components of executive compensation: base salary; long-term incentives,
including shares of performance-based restricted stock and options to
purchase UNUM stock; and contingent annual incentive payments, which may be
in cash and/or stock.
- - The Committee has taken steps to preserve the deductibility of executive
compensation under the Code by designing stock-based incentive programs that
comply with Section 162(m) thereof. However, the Committee reserves the right
to make determinations (as in the case of the special cash awards referred to
below) as to existing and future compensation plans that it believes to be in
the best interests of the stockholders, whether or not such compensation is
fully deductible.
COMPENSATION PEER GROUP
- - The Committee has approved a list of 32 companies in the insurance and
financial services industry against which to measure UNUM's executive
compensation (the "Peer Group"), including 22 insurance companies (the
"Insurance Sub-Group"). The Peer Group is different from the companies making
up the Dow Jones Life Insurance Index shown on the Performance Graph below
because the Corporation looks beyond the life insurance industry when hiring
executives. The Committee periodically reviews the composition of the Peer
Group.
- - Total compensation will be designed to approximate that paid at the 75th
percentile of the Peer Group if the Corporation performs at the level
achieved by the 75th percentile of the Peer Group.
- - Total compensation will be less than the median for the Peer Group if the
Corporation's results under-perform this group.
BASE SALARY
- - Base salaries are set to be competitive with the Peer Group for positions
with similar levels of responsibility. Salary decisions are impacted by job
performance but generally are designed to ensure that salaries are at a
competitive level for similar positions within the Peer Group.
12
<PAGE>
Mr. Orr's base salary rate for 1997 was increased to $860,000 per year,
consistent with a significant increase in the average salary level for the
chief executive officers among the Peer Group companies.
LONG-TERM INCENTIVES
- - Long-term incentive compensation is paid in awards of stock options, the
value of which is estimated using a Black-Scholes model, and
performance-based restricted stock. Fifty percent of the targeted value of
stock-based compensation awarded during 1997 was allocated to restricted
stock grants and 50 percent to stock option grants.
- - The Committee does not take into consideration the level of an executive's
stock ownership or accumulated stock options in making determinations
concerning the size of stock-based awards. However, the Corporation has
established minimum stock ownership expectations that provide that over a
five-year period the Chief Executive Officer, each Executive Vice President,
and each Senior Vice President-level officer should accumulate UNUM stock
(exclusive of stock options) valued at five-, three-, and two-times salary,
respectively. The affected officers have continued to make significant
progress toward these expected ownership levels or have exceeded them. In
addition, stock ownership expectations have been established for all
officer-level employees at more junior levels.
- - The Corporation grants nonqualified stock options at fair market value,
generally during the first quarter of each year. Stock options basically
reflect increased stockholder value and have no value to optionees unless the
Corporation's stock price increases. The Corporation has never repriced stock
options. Effective March 1998, the Committee granted options to purchase
400,000 shares of Common Stock to the Chief Executive Officer in recognition
of his record of leadership that has resulted in a 30 percent compounded
annual return to stockholders over the last ten years. These options will
become exercisable over a four year period provided that Mr. Orr remains in
the employ of the Corporation or its subsidiaries.
- - Performance-based Restricted Stock Awards are also generally granted in the
first quarter of each year and vesting is contingent upon the attainment of
multi-year goals set at the time of grant by the Committee. With the
exception of a one-time grant to Mr. Broatch provided for in his hiring
agreement, all outstanding restricted stock awards to the named executive
officers include performance measures established in terms of the
Corporation's average return-on-equity relative to the Peer Group and the
Insurance Sub-Group. In accordance with the performance measures established
for the 1996-1997 cycle, 25 percent of the restricted shares granted for this
cycle were paid out to the named executive officers who participated in this
cycle, including the Chief Executive Officer, and the remaining shares were
cancelled.
ANNUAL INCENTIVE
- - The Annual Incentive Payment amounts shown in the second column of the
Summary Compensation Table include an annual incentive payment pursuant to
the Incentive Compensation Plan for Designated Executive Officers ("Incentive
Plan") and a special cash payment that the Committee awarded in March 1998 to
recognize the long-term efforts of certain named executive officers which
resulted in the 52 percent total return to stockholders which the Corporation
achieved during 1997. For the Chief Executive Officer, the special award
amount was $270,000.
13
<PAGE>
- - Pursuant to the Incentive Plan, which was approved by the stockholders at the
1997 Annual Meeting, during the first quarter of 1997 the Committee
established maximum cash award levels for each of the named executive
officers as a function of the earnings-per-share to be attained by the
Corporation during the year.
- - In February 1998 the Committee awarded incentive amounts to the named
executive officers within the maximum limits set by the Committee. For the
Chief Executive Officer, an Incentive Plan Payment of $872,000 was awarded.
Ronald E. Goldsberry Donald W. Harward Lawrence R. Pugh
14
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock for the last five fiscal years with the cumulative total return on
the S&P 500 and the Dow Jones Life Insurance Industry Index over the same period
(assuming the investment of $100 in the Corporation's Common Stock, the S&P 500
and the Dow Jones Life Insurance Industry Index on December 31, 1992, and the
reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
UNUM INDUSTRY INDEX S&P 500
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 100.00 100.00 110.00
1994 74.00 89.00 112.00
1995 110.00 124.00 153.00
1996 147.00 164.00 189.00
1997 224.00 244.00 252.00
</TABLE>
15
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Corporation and by UNUM Life Insurance Company of America ("UNUM America") to
the Chief Executive Officer and the other four most highly compensated executive
officers of the Corporation during any of the past three fiscal years during
which such person served as an executive officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
----------------------------
ANNUAL COMPENSATION NUMBER OF
------------------------ SECURITIES
NAME AND INCENTIVE RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY PAYMENT(1) STOCK AWARD(2) OPTIONS COMPENSATION(6)
- -------------------------------------- --------- ---------- ------------ --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James F. Orr III...................... 1997 $ 838,461 $ 1,142,000 $ 1,642,084(3) 79,000 $ 24,750
Chairman and CEO 1996 $ 739,923 $ 740,000 $ 912,600(3) 82,400 $ 9,000
1995 $ 691,385 $ 248,900 $ 446,250(4) 73,900 $ 214,285
Robert W. Crispin..................... 1997 $ 540,384 $ 324,200 $ 687,384(3) 33,200 $ 232,423
Executive Vice President 1996 $ 500,000 $ 363,000 $ 450,450(3) 40,600 $ 266,884
1995 $ 480,769 $ 250,000 $ 656,000(5) 110,300 $ 684,849
Stephen B. Center..................... 1997 $ 416,154 $ 351,700 $ 0 22,200 $ 24,750
Executive Vice President 1996 $ 395,385 $ 287,100 $ 409,500(3) 37,100 $ 9,000
1995 $ 372,154 $ 111,000 $ 170,000(4) 28,300 $ 6,000
Elaine D. Rosen....................... 1997 $ 340,000 $ 249,000 $ 565,182(3) 27,200 $ 14,205
President, UNUM America 1996 $ 296,154 $ 184,900 $ 228,150(3) 20,500 $ 9,000
1995 $ 272,308 $ 65,400 $ 102,000(4) 17,100 $ 6,000
Robert E. Broatch..................... 1997 $ 312,693 $ 172,000 $ 400,974(3) 19,300 $ 88,150
Senior Vice President and CFO
</TABLE>
- ------------
(1) Cash incentive payments for 1997, 1996 and 1995 performance have been listed
in year earned, but were actually paid in the following fiscal year. Such
amounts include annual incentive payments and the following special cash
payments described in the foregoing Compensation Committee Report: Mr. Orr:
$270,000; Mr. Center: $102,000; and Ms. Rosen: $62,000.
(2) The aggregate number and fair market value at December 31, 1997 ($53.94 per
share) of shares of Restricted Stock held by the five named executive
officers were as follows: Mr. Orr: 95,200, $5,134,850; Mr. Crispin: 33,400,
$1,801,513; Mr. Center: 42,000, $2,265,375; Ms. Rosen: 27,400, $1,477,888
and Mr. Broatch: 29,900, $1,612,731.
(3) The restrictions may lapse on some or all of the shares represented by the
restricted stock awards shown for each named executive officer, provided
that the Corporation attains targeted three-year return-on-equity goals and
that the executive remains in the Corporation's employ as provided in the
1990 and 1996 plans.
16
<PAGE>
(4) The restricted stock awards shown were replaced by a grant to the named
executive of an identical number of shares in March 1996. Restrictions
lapsed on 25 percent of such shares on March 13, 1998.
(5) The amount shown includes 14,400 shares with a grant value of $306,000 and
16,000 shares with a grant value of $350,000 that were surrendered on
December 1, 1997, in exchange for a promise to pay 30,400 shares of
unrestricted shares of the Corporation (subject to Mr. Crispin's continued
employment with UNUM America until January 16, 1999, in respect of the
16,000 shares) on January 1 following the calendar year in which his
employment with UNUM America terminates, or promptly upon termination in the
event that such termination occurs prior to the fifth anniversary of Mr.
Crispin's employment with UNUM America or under circumstances that would
entitle him to benefits under his Severance Agreement with the Corporation.
(6) Except as noted below, the stated amounts are the Corporation's matching
contributions to the Corporation's qualified and nonqualified 401(k) plans.
In December 1995, the Corporation paid $190,267 plus the proceeds of an
existing insurance policy to purchase a new split-dollar life insurance
policy on the lives of Mr. and Mrs. Orr that will provide a superior benefit
to Mr. and Mrs. Orr at lower overall cost to the Corporation. Mr. and Mrs.
Orr have assigned their interests in the policy back to the Corporation for
the period until Mr. Orr's retirement, and Mr. Orr is obligated under this
assignment to pay back to the Corporation the full cost of the policy if his
employment is terminated. Mr. Orr's repayment obligation will be reduced
prorata over the period until his normal retirement age of 65, and at normal
retirement the policy will become the property of Mr. and Mrs. Orr without
any repayment obligation. Insurance premiums were paid by the Corporation
with respect to Mr. Orr's previously existing term life insurance in the
amount of $18,018 relative to 1995. In the case of Mr. Crispin, the
Corporation paid three equal annual payments of $220,000 to compensate him
for foregone compensation from his previous employer and provided relocation
assistance of $37,384 and $464,849, relative to 1996 and 1995, respectively.
(See description under "Other Agreements and Transactions.") In the case of
Mr. Broatch, the Corporation paid $75,000 in 1997 to compensate him for
foregone compensation from his prior employer. (See description under "Other
Agreements and Transactions.")
17
<PAGE>
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL POTENTIAL REALIZED VALUE
UNDERLYING OPTIONS GRANTED AT EXPIRATION(2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 0%($) 5%($) 10%($)
- ------------------------ ----------- ------------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James F. Orr III........ 79,000 3.83% $ 37.84 3/14/07 $ 0 $ 1,880,181 $ 4,764,748
Robert W. Crispin....... 33,200 1.61% $ 37.84 3/14/07 $ 0 $ 790,152 $ 2,002,401
Stephen B. Center....... 22,200 1.08% $ 37.84 3/14/07 $ 0 $ 528,355 $ 1,338,955
Elaine D. Rosen......... 27,200 1.32% $ 37.84 3/14/07 $ 0 $ 647,354 $ 1,640,521
Robert E. Broatch....... 19,300 0.93% $ 37.84 3/14/07 $ 0 $ 459,335 $ 1,164,046
</TABLE>
- ------------
(1) Options were granted on March 14, 1997 based on the fair market value on
that date. Thirty three percent of the options vested on March 14, 1998. An
additional 33 and 34 percent will vest on March 14, 1999 and 2000,
respectively.
(2) Potential realizable value at expiration is based on an assumption that the
stock price of the Common Stock appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the ten-year
term. These numbers are calculated based on the requirements promulgated by
the Commission and do not reflect the Corporation's estimate of future stock
price growth.
AGGREGATED OPTION EXERCISES IN FISCAL 1997
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ON EXERCISE VALUE -------------------------- ----------------------------
NAME OF OPTIONS REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
James F. Orr III............. 80,000 $ 2,206,930 419,992 134,508 $ 14,189,916 $ 2,625,851
Robert W. Crispin............ 0 $ 0 83,398 100,702 $ 2,595,216 $ 2,495,725
Stephen B. Center............ 81,700 $ 1,933,164 35,243 47,357 $ 905,383 $ 972,873
Elaine D. Rosen.............. 29,400 $ 757,184 30,565 41,235 $ 815,653 $ 782,591
Robert E. Broatch............ 0 $ 0 12,365 55,635 $ 290,578 $ 1,163,331
</TABLE>
- ------------
(1) Potential unrealized value is (i) the fair market value at December 31, 1997
($53.94 per share) less the option exercise price times (ii) the number of
shares acquired upon exercise of options.
OTHER AGREEMENTS AND TRANSACTIONS
The Corporation has entered into severance agreements (the "Severance
Agreements") with each of Messrs. Orr, Crispin, Center and Broatch and Ms. Rosen
providing for payments and other benefits to the officer if, within two years
after a Change in Control of the Corporation, as defined in the Severance
Agreements, his or her employment is terminated (a) involuntarily other than for
willful and continued failure by the officer to perform substantially his or her
duties or willful conduct which is demonstrably and materially injurious to the
employer; or (b) voluntarily by the officer, if for Good Reason as defined in
the Severance Agreements. Under the Severance Agreements, an officer whose
employment so terminates will receive, in addition to accrued salary and
prorated incentive compensation, (1) a lump sum payment equal
18
<PAGE>
to three times the sum of his or her salary in effect at termination or
immediately prior to the Change in Control, whichever is greater, plus three
times the average of the annual incentive compensation awards received by the
officer in respect of the preceding three years; (2) a lump sum payment equal to
the present value of the reduction in retirement payments resulting from the
termination, assuming employment had continued for three additional years; and
(3) continuation of life, disability and accident and health insurance benefits
for a maximum of three years, except to the extent that equivalent benefits are
provided by a subsequent employer. In the event of a Potential Change in
Control, as defined in the Severance Agreements, the Corporation is obligated to
fund a trust in an amount sufficient to provide for all cash payments under the
such agreements.
Effective January 16, 1995, the Corporation entered into an agreement with
Mr. Crispin providing for an initial base salary of $500,000, a minimum annual
incentive award, stock option grant and restricted stock grant in respect of
1995 of $250,000, 30,000 options and 14,400 shares, respectively, and a
partially nonqualified pension arrangement providing for Mr. Crispin to receive
the equivalent of two years credit under the Corporation's retirement plans in
which executive officers participate for each of his first ten years of
employment. To compensate Mr. Crispin for foregone compensation from his
previous employer, the Corporation agreed to pay to him a total of $660,000 in
three equal installments, with the initial payment made on the day of employment
and subsequent installments on the anniversary of employment in 1996 and 1997,
grants on the date of hire of 80,000 options and 16,000 shares of time-lapse
restricted stock, and relocation assistance including up to $200,000 in
protection for loss on the sale of his home. In the event of termination of Mr.
Crispin's employment for any reason (except in connection with a Change in
Control of the Corporation) other than resignation or Cause during the first
five years of employment, Mr. Crispin will receive a severance payment
equivalent to two years' base salary.
Effective April 8, 1996, the Corporation entered into an agreement with Mr.
Broatch providing for an initial base salary of $300,000, a minimum annual
incentive award, stock option grant and restricted stock grant in respect of
1996 of $80,000, 20,500 options and 7,800 shares, respectively, and a partially
nonqualified pension arrangement providing for Mr. Broatch to receive the
equivalent of two years credit under the Corporation's retirement plans in which
executive officers participate for each of his first five years of employment.
To compensate Mr. Broatch for foregone compensation from his previous employer,
the Corporation agreed to pay him a total of $300,000 in installments of
$150,000 on the first day of employment, and $75,000 on the anniversary of
employment in 1997 and 1998, grants on the date of hire of 28,000 options and
11,600 shares of time-lapse restricted stock, and relocation assistance
including up to $100,000 in protection for loss on the sale of his home. In the
event of termination of Mr. Broatch's employment for any reason (except in
connection with a Change in Control of the Corporation) other than resignation
or Cause, Mr. Broatch will receive a severance payment equivalent to one year's
base salary.
PENSION PLAN
The following table illustrates the combined estimated annual benefits
payable under the UNUM Employees Pension Plan and Trust (the "Pension Plan") and
the Supplemental Retirement Plan (the "Supplemental Plan") upon normal
retirement of participants with varying Final Average Earnings (as defined
below) and years of Credited Service. The amounts shown are annual payments for
the life of a participant who retires at age 65. Specific variations from the
table for the named executives are discussed below. As of December 31, 1997,
Messrs. Orr, Crispin, Center and Broatch, and Ms. Rosen had 11, 6, 35, 4, and 22
years of Credited Service, respectively. If each of the above were to continue
his or her employment
19
<PAGE>
until age 65, the respective years of Credited Service would be 21, 27, 40, 23,
and 42 for purposes of computing benefits.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS BY YEARS OF CREDITED SERVICE
FINAL AVERAGE ----------------------------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40 45
--------------- ---------- ---------- ---------- ---------- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 500,000 ............. $ 75,400 $ 114,800 $ 155,300 $ 196,900 $ 239,600 $ 273,000 $ 306,500 $ 339,900
600,000 ............. 91,200 138,800 187,700 238,000 289,600 330,000 370,400 410,800
700,000 ............. 107,000 162,800 220,200 279,100 339,600 386,900 434,300 481,600
800,000 ............. 122,800 186,800 252,600 320,200 389,600 443,900 498,100 552,400
900,000 ............. 138,500 210,800 285,100 361,300 439,600 500,800 562,000 623,300
1,000,000 ............. 154,300 234,800 317,500 402,400 489,600 557,800 625,900 694,100
1,100,000 ............. 170,100 258,800 349,900 443,500 539,600 614,700 689,800 764,900
1,200,000 ............. 185,900 282,800 382,400 484,700 589,600 671,600 753,700 835,800
1,300,000 ............. 201,600 306,800 414,800 525,800 639,600 728,600 817,600 906,600
1,400,000 ............. 217,400 330,800 447,300 566,900 689,600 785,500 881,500 977,400
1,500,000 ............. 233,200 354,800 479,700 608,000 739,600 842,500 945,400 1,048,300
1,600,000 ............. 249,000 378,800 512,200 649,100 789,600 899,400 1,009,300 1,119,100
1,700,000 ............. 264,800 402,800 544,600 690,200 839,600 956,400 1,073,100 1,189,900
1,800,000 ............. 280,500 426,800 577,100 731,300 889,600 1,013,300 1,137,000 1,260,800
</TABLE>
The above table reflects the amendment of the Pension Plan to a Lifecycle
formula effective January 1, 1997. Retirement benefits under this plan include a
Basic Benefit based upon age at retirement, years of Credited Service, Final
Average Earnings and Social Security Covered Compensation and an additional
Transition Benefit based on the preceding factors and also upon each
participant's age at December 31, 1996. The plan also includes certain limited
duration grandfathered formulas in effect prior to 1997. "Final Average
Earnings" is defined as the average of salary plus annual cash incentive
payments for the five years in which earnings were highest within the last 10
years of employment. "Social Security Covered Compensation" means the average of
the annual Social Security taxable wage bases in effect during the 35 year
period ending when the employee reaches Social Security Retirement Age. Accrued
benefits are 100 percent vested after five years of service. Because the
Transition Benefit varies based upon age at December 31, 1996, and Social
Security Covered Compensation varies with year of birth, the retirement benefits
shown above are averages; benefits for individual executives may be 10 to 15
percent higher or lower than shown.
The Supplemental Plan provides benefits equal to the difference between what
the Pension Plan can pay reflecting the limits imposed by Sections 401(a)(17)
and 415 of the Code and what the Pension Plan would otherwise have paid had
these limits not existed. All participants in the Pension Plan who retire or
terminate after January 1, 1983 and are affected by the limits are eligible to
participate in the Supplemental Plan, including Messrs. Orr, Crispin, Center and
Broatch, and Ms. Rosen. Effective January 1, 1997, the Supplemental Plan also
pays benefits that would have been paid by the Pension Plan had compensation not
been deferred.
The Supplemental Executive Retirement Plan (the "SERP") provides benefits
for certain executives who have been designated to participate by the
Corporation's board, including certain of the named executive officers. The SERP
benefits for Messrs. Orr and Crispin equal 2.5 percent of Final Average Earnings
for each year of Credited Service, up to a maximum of 20 years, less benefits
payable from the Pension and Supplemental Plans. Mr. Center and Ms. Rosen are
eligible to participate in a modified
20
<PAGE>
SERP; however, their benefits under the Pension and Supplemental Plans are
expected to exceed the minimum benefits guaranteed under the SERP formula.
OFFICER AND DIRECTOR SECURITIES REPORTS
Rule 14a-101 under the Exchange Act requires that late filings of beneficial
ownership statements be disclosed within the company's proxy statement. Based
solely on its review of the copies of beneficial ownership statements received
by it, or written representations from certain reporting persons that no
beneficial ownership statements were required for those persons, the Corporation
believes that all applicable beneficial ownership statements under Section 16(a)
of the Exchange Act that were required to be filed by executive officers and
directors of the Corporation in their personal capacities were filed in a timely
manner, except with regard to the following exempt transactions: Mr. Orr and Mr.
Averyt each omitted disclosure of a 1997 gift. Both reporting persons have since
reported these exempt transactions.
PROPOSALS OF STOCKHOLDERS
In order for proposals of stockholders to be included in the proxy materials
for presentation at the 1999 Annual Meeting of Stockholders, such proposals must
be received by the Corporate Secretary no later than November 30, 1998.
ADDITIONAL INFORMATION
The Corporation will bear the cost of soliciting proxies from its
stockholders and will enlist the help of banks and brokerage houses in
soliciting proxies from their customers. The Corporation will reimburse these
institutions for out-of-pocket expenses. In addition to the use of the mails,
proxies may be solicited personally or by telephone by the directors, officers
and employees of the Corporation or its subsidiaries. The Corporation has
engaged Georgeson & Company Inc. to assist in soliciting proxies for a fee of
approximately $7,500 plus reasonable out-of-pocket expenses.
/s/ Kevin J. Tierney
KEVIN J. TIERNEY
SECRETARY
21
<PAGE>
UNUM CORPORATION
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 8, 1998
R
The undersigned hereby appoints as Proxies, James F. Orr III, Robert E.
O Broatch and Kevin J. Tierney, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
X designated below, all the shares of Common Stock of UNUM Corporation held
of record by the undersigned on March 10, 1998, at the Annual Meeting of
Y Stockholders to be held on May 8, 1998, or any adjournments thereof.
Election of Directors, Nominees:
George J. Mitchell, Lawrence R. Pugh, Lois Dickson Rice and John W. Rowe
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
SEE REVERSE
SIDE
<PAGE>
0606
PLEASE MARK YOUR
/ X / VOTES AS IN THIS
EXAMPLE
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is make, this proxy
will be voted FOR Proposals 1, 2, 3 and 4. If other matters properly come
before the meeting, the Proxies will vote in accordance with their best
judgment.
FOR WITHHELD FOR AGAINST ABSTAIN
1. / / / / / / / / / /
Election of Directors 2. Proposal to ratify the
(mark only one) appointment of Coopers &
Lybrand L.L.P. as the
- ------------------------- Corporation's independent
INSTRUCTION: To withhold auditors for the year 1998.
authority to vote for any
individual nominee write
that nominee's name on I would like to attend UNUM Corporation's
the space provided. Annual Meeting of Stockholders on May 8, / /
1998. Please provide an admission ticket.
(Response required by 4/30/98.)
-------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
-------------------------------------------------
SIGNATURE(S) __________________________________________DATE____________________
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, EACH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
